Sputter deposited thin film AlN:Er (1 at.%) emits at 554 nm and 561 nm as a result of 2H11/2→ 4I15/2 and 4S3/2→ 4I15/2 transitions under 532 nm NdYAG laser and 783.3 nm crystal laser excitation. An external magnetic field of 0.1 T enhances the green emission and splits the 4S3/2 energy level in two sub-levels with a difference of 0.013 eV. The splitting of energy level produces new emission from Er3+ with a wavelength of 564.5 nm. Infrared emission is also observed at 1552 nm as a result of 4I13/2→ 4I15/2 transition. Enhanced luminescence shows the suitability of Er3+ for high efficiency optical devices.